"Strategic Default" is the new black.

Discussion in 'Markets & Economies' started by AustralianAustrian, Aug 9, 2011.

  1. AustralianAustrian

    AustralianAustrian Active Member

    Joined:
    Aug 9, 2011
    Messages:
    241
    Likes Received:
    42
    Trophy Points:
    28
    Location:
    Australia
    I'm curious to know if anyone knows of anyone who has chosen to strategically default on their mortgage. ie. they have chosen to not pay the mortgage and redirect the mortgage payment and/or rent into savings or PMs. I know of 2 people on my street that have not paid their mortgage in nearly 3 years. The bank has not repossesed the home yet. I'm assuming the bank doesnt want to mark-to-market and is waiting for inflation to prop up the price so they dont have to report on the loss yet.

    I hear stories of "shadow inventory" of unsold repo properties. I'd be interested in hearing any other experiences.
     
  2. Old Codger

    Old Codger Active Member Silver Stacker

    Joined:
    May 13, 2011
    Messages:
    4,782
    Likes Received:
    5
    Trophy Points:
    38
    It would simply amaze me if a borrower had not paid his mortgage payments for 3 years and was still in the home.

    Certainly not with the Big 4.

    not in the olden days! ....and 2 of them in the same STREET!!!


    OC
     
  3. boston

    boston Well-Known Member Silver Stacker

    Joined:
    Jul 7, 2009
    Messages:
    3,857
    Likes Received:
    24
    Trophy Points:
    48
    Location:
    Australia
    Back in the late 1980's? when there was the stock market fiasco, the suburb that I lived in, with a reasonably high income/prestige factor, had circa 200 properties that the owners could not pay the mortgage on.

    The banks deliberately did not foreclose, fearing a drop in the properties value suburb wide. The mortgagees got to stay in their properties, to keep vandals and squatters out, which kept the values higher than if they were vacant.

    At that point you could buy 4-5 bedroom, tennis court, some with a pool and Port Phillip, Melbourne bay views for circa $200,000 - $250,000. Many bargains to be had, if you knew and approached the banks on the quiet.
     
  4. hiho

    hiho Active Member Silver Stacker

    Joined:
    Apr 4, 2011
    Messages:
    7,816
    Likes Received:
    21
    Trophy Points:
    38
    Location:
    South Brisbane
    interesting seems a run [bank] is only a flicker away

    dont throw good money after bad :cool:
     
  5. Guest

    Guest Guest

    I find the above scenario impossible to believe,not doubting you but the information they are passing onto you.
    They were obviously not a fan of Austrian economics to begin with.
    I know of one person who strategically defaulted on all levels, house mortgage,credit cards,cleaning out Super.He is into PM's today and is quite wealthy.He had thought everything through before the default and proceeded clinically to cash up and use the credit system.
    Can't remember specifically all the details,but it was complex and all made sense at the time he explained it.

    REDBACK
     
  6. Au.Ag.Mzch

    Au.Ag.Mzch New Member

    Joined:
    Aug 7, 2011
    Messages:
    147
    Likes Received:
    0
    Trophy Points:
    0
    Location:
    Geelong, AUS
    I've heard of strategic defaulting in the US since they have non-recourse loans so you can simply hand the house keys to the bank and walk away from your mortgage...but I didn't think that was possible in Aus...? Unless they declare bankruptcy which means no access to credit for a VERY long time :| It sounds like an all-in, 'burn your bridges' strategy :|
     
  7. Dabloodymess

    Dabloodymess Active Member

    Joined:
    Jul 7, 2010
    Messages:
    1,347
    Likes Received:
    2
    Trophy Points:
    38
    Location:
    Russia
    Its not that long, only 7years.

    My parents had to declare when I was a kid.... just on the family home, not investments. The day the 7 (I think) years were up my Dad was at the bank again getting approved for credit, and luckily is doing ok now.

    For some people its the only option, and a few years isnt that long.
     
  8. domdolittle

    domdolittle Active Member Silver Stacker

    Joined:
    Sep 27, 2010
    Messages:
    820
    Likes Received:
    28
    Trophy Points:
    28
    Location:
    Caboolture near Brisbane
    Oh well, 7 years is not that long...

    The way things are going, 7 years will be just when we'll come out of recession !

    So, perhaps going bankrupt ain't as bad as it may sound ?

    :cool:
     
  9. nonrecourse

    nonrecourse Well-Known Member

    Joined:
    Jul 11, 2011
    Messages:
    1,487
    Likes Received:
    108
    Trophy Points:
    63
    Location:
    Melbourne Australia
  10. projack

    projack Well-Known Member Silver Stacker

    Joined:
    Aug 12, 2009
    Messages:
    3,346
    Likes Received:
    586
    Trophy Points:
    113
    Location:
    Brisbane
    Banks only keep records for 7 years
     

Share This Page